Euro recovers some ground against British Pound as Oil prices and French yields fall

• 0.8400 is within reach for EUR/GBP. The pair has rebounded from Friday’s 17-month low of 0.8361.
• Oil prices have eased moderately following reports that Qatar is mediating a new peace plan between the US and Iran.
• France’s escape from a Moody’s debt downgrade over the weekend has also lifted market sentiment.

0.8400 remains a few pips above EUR/GBP at the European session’s opening. The Euro (EUR) is recovering against the British Pound (GBP) on Monday as sentiment improves modestly. Oil prices have eased from six-month highs, while France avoided a debt rating downgrade over the weekend. The pair has risen from Friday’s low of 0.8361 after losing 2.7% over the previous four weeks.

Reports that Qatari mediators reached Tehran on Sunday have helped Oil prices ease moderately, lending support to the Euro. The visit forms part of a US-coordinated initiative aimed at reducing regional tensions.

At the time of writing, Brent Oil is trading at 110.25, down from Friday’s near-six-month high of 1.12.88. For the Eurozone’s net-importing economies, prices remain far too high. Even so, hopes that the mediation efforts might prevent the conflict from escalating further are already putting pressure on the safe-haven USD and supporting broad Euro gains.

France Retains Moody’s Credit Rating Despite Continuing Riots

Despite continuing riots in some of France’s major cities, ratings agency Moody’s left the country’s debt rating at Aa3. Markets had expected a downgrade and welcomed the decision. A sharp fall in France’s Treasury yields at the start of the week added to support for the Euro.

Monday’s main macroeconomic release is the German IFO Business Climate report. Investors are nevertheless likely to stay on the sidelines ahead of Thursday’s monetary policy decision from the European Central Bank (ECB). The Bank of England (BoE) follows next week, with markets preparing for a quarter-point rate increase. That prospect is highly likely to restrain Pound bears this week.